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Trade Routes: Value Innovation

Michael Wynne

Imagine you are traveling back in time to the year 1447. You visit the Royal Mint in the city of Strasbourg, France, to see how coins are made. Molten gold is poured into cylindrical molds. The gold cylinders are removed and cut into blanks. Then an artisan’s die imprints the design onto the soft surface of the gold, and, voilà—a coin is created.

Later that day, you happen to visit a vineyard on the outskirts of the town. Grapes are dumped into huge vats, and a flat, circular board is lowered slowly by a large wooden screw to squeeze all the juice from the fruit.

Both the coin-stamping and wine-making technologies have been around for 1,500 years. When the two were put together, it created one of the most valuable inventions of all time. What is that invention and who invented it?

If you guessed Johannes Gutenberg’s printing press, you are right.

Innovation and Cosmetics

What does this have to do with the cosmetic industry? At this very moment, thousands of cosmetics with a myriad of applications are available. They are waiting for somebody with a mind like Gutenberg’s to put two or more of them together for the next greatest creation in the cosmetic industry.

Creativity is more than just putting two things together and getting something better. It’s about asking “What if?” constantly and not accepting conventional thinking.

Today’s world markets are flooded with infinite versions of beauty products and services. How do consumers choose among them?

You could say advertising and brand names help consumers to choose. Unfortunately, today’s consumers are skeptical about advertising messages, and although brand names are important, they no longer are enough to sway consumers.

New Solutions

Price and performance alone won’t seduce consumers anymore. Today’s consumers expect suppliers to offer new solutions to existing and future needs. Today’s consumers expect greater value at lower cost.

Greater value at lower cost requires value innovation, which happens when use, price and cost are aligned, and offered in ways that create the customer’s perception of substantial and differentiated benefit. In addition to being the key to growth and profit in every market, value innovation often creates a completely new market segment along the way.

Thomas Edison said invention was “one percent inspiration and 99 percent perspiration.” Creativity precedes innovation. Creativity is what you think. Innovation is what you do. In today’s cosmetic business, both creativity and innovation are needed, but there also is a need to develop a systematic approach for each.

Systematic Creativity

Time. Do you set aside time to search for creative solutions to consumer needs? It is hard to be creative on demand, but two things happen when the necessary time is devoted for it: first, pressure fires up creative juices; second, you subconsciously keep thinking about the creative challenges. Unorthodoxy. Do you challenge the “articles of faith” of your industry?

Look at nonrelated industries. For example, GE doesn’t sell jet engines, it sells pounds of thrust that its customers want in the first place. In other words, it sells the result, not the means. Customers don’t buy products or services—they buy expectations of desired results. What do you sell to your cosmetic customers—the means, or the end result? Which has more value for the customer?

Are you accepting traditional industry definitions? Why not challenge them instead? For example, packaging is viewed as a means to protect cosmetic products and enhance their appearance. The industry spends billions on packaging that for the most part is thrown away. But, what if it could become part of the end result? The purpose of cosmetics is to beautify. How can packaging contribute value to that end?

Are you adding value at every level of the customer relationship? Why does the customer have to go to a store, or order online or by telephone? Could certain beauty products be sold by vending machines? How about kiosks? Ice cream is sold from trucks that roam neighborhoods. What would be the beauty product equivalent?

Systematic Innovation

Innovation is work. It requires a systematic process that leads to an outcome. The steps of the process can vary, but the one thing that cannot vary is the need for a sense of urgency. How do you create a sense of urgency?

First— set goals. Goals channel energy toward the target. Second—set timelines with each goal. Timelines create a healthy level of pressure that prompts people to act faster.Third—tie the rewards to the outcome. No outcome, no reward. Fourth—frequently remind all involved that time is running out from the minute you set your watch. Fifth—along the way, analyze the existing innovation process looking for ways to create an even faster, better one.

Do you have to be a Gutenberg or an Edison to generate creative ideas? No. You do have to devote the time to creating exciting new ideas. You also need to b e organized. You can have the greatest ideas in the world, but if you don’t have a system for turning them into differentiated products and services that provide greater value, those ideas will fade away to nothing.

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